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Big bearish spread targets the VXX

A bearish play topped the option activity in the VXX volatility exchange-traded note at the end of last week.

The big trade in the iPath S&P 500 VIX Short-Term Futures Note on Friday was a vertical spread in the last set of May Weekly options, which expire in 35 days. optionMONSTER's Depth Charge system shows that a trader bought of 5,717 of the 19 puts for $1.45 and sold 17,151 of the 17 puts for $0.50. This is new activity, as there was no previous open interest at either strike.

The trade, also known as a ratio spread because of differing number of contracts at each strike, is looking for the VXX to fall to the $17 level by that expiration in about a month. The note is composed of the front two nearest-month futures of the CBOE Volatility Index and usually carries a premium to the spot VIX, which eats away at the value of this ETN. (See our Education section)

The VXX was down fractionally on Friday to $19.22. It hit an all-time low of $18.23 just in the previous week.